Fraud hits record level in 2011
Fraud rises 9% in 2011 compared to 2010 but false insurance claims fall
The UK’s economic problems have contributed to record levels of fraud, according to the UK’s Fraud Prevention Service.
CIFAS, a not-for-profit membership association dedicated to fraud prevention, recored over 236,500 cases of frauds during 2011 – the highest number ever recorded. That was a 9% rise on 2010.
ID fraud and facility takeover fraud, where a trickster takes over a person’s mobile phone, bank account and credit card, were two types of fraud on the rise.
But the good news for insurers, who took a tough approach to fraud last year, is that the number of false insurance claims fell 26.3% in 2011 compared to 2010. Cases fell to 396 from 537.
Research by Insurance Times has shown that 70% of industry respondents believe insurance fraud increased last year.
For example, Allianz Insurance recorded a rise in household fraud last year and predicts it will get worse.
“Last year we detected an increase in household insurance fraud, now at 24%,” said fraud manager Mihir Pandya.
“Within an environment of rising costs and unemployment, this is a trend that we only feel will get worse before it gets better.”
Readers' comments (1)
Adele Clarkson | 27 January 2012 12:19 GMT
David Kelly, Distribution Director, Open GI
With insurance fraud still on the increase and costing the industry millions of pounds per year, such as motor fraud costing £466m alone according to the ABI last year, there are many steps that insurers and brokers can adopt using technology to de-risk premiums and combat fraud. At the point of sale, there is an effective and simple mechanism to help reduce the risk of fraud by using data enrichment using third party data such as credit details, claims history, ID checks to policy history etc. However, the issue for the insurance industry is not only the overwhelming number of different data sources and its reliability but how it is translated into a meaningful calculation into an insurer’s rating engine. To save the industry the cost of multiple third party look-ups at insurer level and allow insurers to choose the best risks, we think the answer is to introduce third party data look-up earlier in the quote process at the point of sale whereby data can be shared and made available on one system.
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